Likes
Michael McCarthy from CMC Markets likes Rio Tinto (RIO).
He says the company’s earnings report, due this week, may surprise on the upside after a solid quarter’s production.
“There is also potential for moves to return cash to shareholders. The recent pull back is a buying opportunity in my view,” he says.
Our chartist Gary Stone from Share Wealth Systems likes Aristocrat (ALL).
Aristocrat has broken out above a resistance zone between $31.65 and $32.05 and closed strongly higher on Friday. The chart shows a series of higher troughs preceding the breakout, symptomatic of increasing demand for the stock.
Now that the breakout has occurred, there’s a strong chance that the old resistance zone will be tested as a possible new support zone. If this is to occur we would see the price retrace back towards the old resistance zone and then bounce higher from that level, and in doing so create another higher trough once more. From a technical view, protective stops can be placed below any of the most recent troughs that have formed down to the $29.41 level.
Dislikes
Michael doesn’t like GUD Holdings.
“While strategically the transformation of the earnings profile is appealing, the share price is reflecting maximum optimism. The report is encouraging but significant integration risks could see a shift in investor sentiment,” he says and is happy to lock in gains at current levels.
Gary doesn’t like AMP.
It had fallen to its 2009 long-term lows, which were acting as the last remaining support level before a further fall was possible. This has now occurred with a fall of over 8% on Friday 27 July on heavy volume as indicated on the chart. This now opens up the possibility of further falls to the $3.00 zone, a level not seen since 2003.
It is likely that AMP will now retest the old support zone between $3.50-$3.60, so look for that level to act as a new resistance zone and for further selling to occur at those levels.
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